Nov. 30 (Bloomberg) -- India’s benchmark stock index rose
as some investors judged the gauge’s worst monthly performance
since January as excessive even as the country’s economy grew
last quarter at the slowest pace in more than two years.

Reliance Industries Ltd., the country’s largest company,
rose 1.7 percent, reversing a loss of as much as 1.6 percent.
Tata Consultancy Services Ltd., the largest software maker,
gained 2 percent, erasing a decline of as much as 1.1 percent.

The BSE India Sensitive Index, or Sensex, rose 0.7 percent
to 16,123.46 at the 3.30 p.m. close in Mumbai. It pared a loss
of as much as 1 percent after data showed economic growth of 6.9
percent last quarter, the smallest gain since 2009, matched the
median of 24 estimates in a Bloomberg survey. The Sensex has
lost 9.4 percent this month, and its 30 members trade at 14
times estimated profits, near the lowest in 2 1/2 years, data
compiled by Bloomberg show.

“There was some bottom-fishing and smart buying as some
stocks are at attractive valuations,” Chokkalingam G, chief
investment officer at Centrum Broking Pvt., said by phone from
Mumbai. “The GDP number was a relief to those who were very
pessimistic.” One of the 24 analyst in the Bloomberg poll had
estimated economic growth of 5.6 percent.

The Reserve Bank of India, which last month cut its growth
forecast to 7.6 percent from 8 percent, has been constrained in
supporting the economy as it struggles with inflation that’s
almost twice the rate in China and higher than in Brazil and
Russia. The central bank has lifted rates 13 times since March
2010, and its next policy review is due Dec. 16.

‘Demonstrative Effect’

China cut the amount of cash that banks must set aside as
reserves for the first time since 2008 as Europe’s debt crisis
dims the outlook for exports and expansion. Reserve ratios will
drop 50 basis points effective Dec. 5, the People’s Bank of
China said in a statement on its website today.

China’s move, which came after markets closed in Mumbai,
may have “a demonstrative effect” on the Reserve Bank, said
Centrum’s Chokkalingam.

The Sensex has lost a fifth of its value this year, the
third-worst performer among major Asian benchmark indexes, on
concern a weak rupee, rising funding costs and Europe’s crisis
will combine to hurt profits. The rupee has slid 14.4 percent
against the dollar this year, Asia’s worst performer, reaching
an all-time low of 52.73 on Nov. 23. The loss in the currency
has raised the cost of repaying foreign debt and raw materials.

Profits for the 30 Sensex companies may grow 11 percent to
12 percent in the year to March 2013, less than the 17 percent
forecast by analysts, according to Tata Asset Management Ltd.
Forty percent of Sensex firms reported earnings that missed
estimates in the September quarter, on top of a 47 percent lag
in the three months ended June, according to Bloomberg data.

Rupee Losses

“The rupee’s slide will contribute as much as 45 percent
to 50 percent to the decline in profits of companies” on the
S&P CNX Nifty Index of the National Stock Exchange of India Ltd.
in the next two quarters,’’ said T.S. Harihar, co-head of
institutional derivatives at ICICI Securities Ltd.

Foreign funds this year reduced holdings of the nation’s
stocks by $851 million as of Nov. 28, fueling the slide in the
rupee, exchange data show. The currency completed its biggest
monthly loss in almost two decades, falling 0.4 percent today to
52.21 per dollar in Mumbai.